Nowadays, U.S. employers offer retiree medical plans in different ways, with strategies that offer returns suiting the economy in general.
- Although capital markets have underperformed, employers are trying out new ways to offer benefits
- Drastic changes in Legislation and accounting rules have necessitated creativity and drastic innovation in medical plans
- Rising costs have forced employers to bring the best to the table, as competition looms high.
Here are some drastic trends that have affected retiree medical plans as the result of the above changes:
#1. Lower Coverage:
Accounting rule changes and huge increases in healthcare costs have prompted a decline in employers offering coverage to retirees. The private-sector employers offer lower benefits in recent years. The state governments and large employers are still providing better coverage to retirees although the average has dropped.
#2. Lack of Coverage Options for Early Retirees
Most organizations lack coverage options for early retirees and there are no strong retiree medical plans in the individual insurance market and hence the options for those retiring before 65 is more than those aged 65+.
#3. Decline in offering coverage from employees
Employers now do not provide coverage to future retirees, especially to Medicare-eligible retirees has dropped considerably. New companies are not offering coverage, leave along retiree medical plans.
#4. Increase in health premiums
The current retirees who benefit from employer-sponsored health coverage and retiree medical plans have mostly experienced huge increases in premiums, at an average of 10% increase while the average cost to early retirees has been way higher in recent times.
#5. Increased Costs out of the pocket
Other than high contributions, employers offering retiree health plans have also spiked out-of-pocket costs to retirees. Also, there has been more than 50% increase with a three-tiered copay structure for generic, brand and no formulary drugs.
#6. Optional Medical Plans
Some other changes to retiree medical plans is making Medicare + Choice plan based on employer preferences, with a cap on employer’s contributions, a defined contribution strategy with plans related to years of service and work contribution and the like.
The trends indicate that retiree medical plans have not been in the best of health. Employers struggle to manage health costs of retirees with the number of employers offering health coverage to future retirees diminishing every year. There are more restrictive eligibility rules, higher out of pocket costs, more account-based plans, and huge increase in cost sharing for all sorts of drugs. It is difficult in the present scenario to predict in the Trump era, as healthcare costs continue to increase drastically, especially if they are done away with in the present scenario.
One needs the support of efficient private medical plan providers who can offer the best-case scenario to all the retirees. Benistar is one of nationwide leader in the design and installation of post-65 group retiree medical plan with an outlook on innovation can surely deliver the best plans out there.